GDP: dynamic consumption, ailing exports

According to the final data, unadjusted GDP grew by 0.9% year-on-year and seasonally and calendar adjusted GDP fell by 0.8% against the previous quarter, in accordance with the preliminary numbers.

On the production side, construction plummeted (by 27.5%), due to the near-absence of inflow of EU transfers, and industry contracted slightly (by 0.7%), primarily due to the decline observed in the automotive sector. These two components account for the strong deceleration of economic growth, despite the robust growth of services (by 3%), primarily a result of expanding trade, tourism, ICT and transport services. Agricultural value added disappoiningly fell by 3.5%, but this is not a major drag on growth.

As for the expenditure side, individual consumption expenditures grew by a whopping 4,8% and overall private consumption by 4%. As a result, domestic use rose by 2.4%, in spite of the fall in fixed capital formation (by 7.8%). Net export, on the other hand, suffered heavily from export losing steam (a fact mostly related to weak industrial export sales), while consumption growth kept import growth high. The growth rate of the export of goods was lower than that of import by almost 3 percentage points, while the gap between the respective growth rates of total export and import of goods and services rose reached 2.1 percentage points.

We expect industrial growth (and export) to gain momentum in the coming quarters, and construction is likely to come around toward the end of the year, but to what extent is uncertain. Accordingly, the degree to which economic growth will exceed 2% in 2016 is uncertain as well.